Dear Gold Bugs, Grow Up: The 1970's are Back

Vince Lanci's picture

The Inflationary Path Forward

by Soren K- When inflation really kicks in: Real estate will not save you, stocks will not save you, Bonds will kill you. Only monetizable dollar denominated assets will save you. Stocks will have already discounted inflation and go sideways to lower in the next 3 years. In a higher rate environment, how can they institute stock buy-back programs?

Crazy as it seems, Trump will likely preside over QE4 and higher rates. Sterilized printing (QE) and rolling out our debt to 100 years (Helo Money).  The Helo money is going to drop on corporations, not people. It will come in the form of subsidies, abatements, and handouts. The people will finance it. Jobs will be created, but wealth will not trickle down.

This is the 1970's all over again

Nothing has changed. The Dollar will stay strong because Trump says so. And it helps orchestrate the biggest short squeeze ever. Emerging markets (and US citizens) will be long dollars when the greenback finally starts its descent. The US and China will laugh it off as they will be out. US citizens will be deciding on hot dogs or cat food again as inflation kills their buying power. We will be forced to buy American because it is cheaper. But it will be crap product again because the raw materials will be more expensive to import. Meanwhile real rates will remain negative as the Fed (intentionally) chases inflation higher. It took 10 years to stop deflation. 

Inflation in Stages

  • Stage 1= Bonds Down, Stocks up, Industrial Commodities Up. PM ignored. Gold lags in a 1970's type inflationary market. 
  • Stage 2= Stocks sideways, Bonds volatile, Industrials Volatile, Precious Up.  Bonds lead. Stocks discount inflated earnings in Stage 1, then stagnate on squeezed margins. 
  • Stage 3= Volcker 2.0

Rebalance Percentages

Keep selling stocks in a rally and buying gold to maintain a 5-10% notional Gold portion on your investments. Stop whining about the price of Gold. It is not a religion. It is a hedge. And it is key to wealth preservation.

Your Home Won't Save You

Real estate will not help this time. The bank will not give you money to spend on loan. Rates will go up. Equity level demands by banks will be higher than before.  And if that doesn't stop them, a "windfall tax" will be instituted to slow down the velocity of money.

Empty-nester in the suburbs? MOVE to the city while you can. Cash in. There will be no new suburban housing demand from millennials. Boomers will have no-one to sell to. Last one out is condemned to suburban poverty.

Europe is Our Future

In Europe the poor live in suburbs, and the affluent live in cities. This is in part because their society is older than ours. Heed it. We are on that path now. The uber-rich  in Greenwich will move to Nevis. The rich will move to Florida. There will be no-one to buy their Mc Mansions. Suburban taxes will go up to compensate for subsidies for inner city rebuilding and more businesses moving to suburban office parks.

New Jersey Suburbs will become Slums.

NJ is a democrat state that derives its income from progressive taxes; Specifically high income tax. How else do you think gasoline is so cheap in NJ? Because of high income tax. When Jon Bon Jovi moves, it is over. Short Middletown, buy Camden. They are already talking about regressive taxes on Gasoline. That is the kiss of death. Double defaulting is already the new rage in some areas of New Jersey.

The Family of 27 Next Door in CT

CT is a regressive state in taxes. The Fairfield County area is GOP all the way. Low income tax and high sales tax. Gas prices are higher. This offsets the low income tax, attracts the rich, and keeps out the poor who can't afford $4.00 gas.

But, when a family of 27  hard working Guatemalans moves in next door to you in CT looking to survive on cutting people's lawns: you will know we are right then. And it will be too late for you. Your home tax mill rates will be higher to subsidize the next industry getting tax abatements to move there. Thank Clinton crony Malloy for that.  UBS, RBS, NBC, Bridgewater, etc.

Gold Folds for Now

This Chart Warned you- Read #2

That means a rounding bottom will likely be needed before the next sustainable rally. The technical levels were spot on. The numbers are what they are. Bullish above, bearish below.  When everything else has peaked, Gold will rally in a most vengeful manner. In the meantime, Gold will be a slave to the USD. Silver will not be as much.

Grow Up

We are disgusted with Goldbugs who need constant bullish affirmations and hand holding. Cry if you want. The macro is valid. Everything else is a trade. Are we pissed? Yes. Because we didn't short the market under our level. Be happy your stocks are going up. Then sell them and buy gold cheaper. It's a 5 year investment from here. It's a 2 day trade. Here it is again from November.


Bonds First, Gold Last to the Inflation Party?

You have to be nuts to sell Gold as a part of your portfolio. If you have the proper allocation of Gold to stocks, then last week should have been a good week for you. Speculation is a different story. But when stocks go up and Gold goes down, be happy. Bonds? In a normative market, Bonds predict, Stocks predict less so, industrial commodities react in real time, and Gold lags.

Bonds are discounting 2 years down the road again. That is because the government is not going to be manipulating them with QE we feel. That is your compass to know that gold will do well in the future. The key for you as an investor is to keep rebalancing your portfolio as stocks rise and Gold drops. FTA- Trump to Make Debt Great Again

Trump Will Make the Military Great(er) Again

Manufacturing and infrastructure wont be "shovel ready" until 2019. The only thing "shovel ready" now is military spending. Watch as Trump channels Reagan in this way. 


Just Saying. Nothing has played out differently since we first made our macro assessment  on November 15th. Keep your trading powder dry. By definition: if you are not buying Gold here, you are bearish or just an overextended long.

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taketheredpill's picture



No Matter What...The DEBT is Still Here.


And the only way to get rid of the DEBT is to:

- Pay it back (Never gonna happen)

- Walk away (watch what the smaller countries do as EU breaks up and)

- Destroy the Currency of the Debt (or Refi into infinity...bye bye principal).


As the current financial system implodes people will look for anything to hold onto.





DEMIZEN's picture

There are many many new and different geopolicital factors and i am afraid that 80s reagan scenario wont play out again this time.

Hongcha's picture

If you can buy and want to buy metals, buy bullets.  Seriously.  We are approaching the point where wullets can be considered a commodity, and not getting any more plentiful nor any cheaper.

jcdenton's picture

Dude, you don't know a FUCKING thing about Reagan ..


Do you?


Watch as Trump channels Reagan in this way. 


In this reguard, I DO hope Trump ..


Channels Reagan .. 


For the sake of ALL of us ..


Please Trump ..


Do, channel (emulate) -- REAGAN!

GoldHermit's picture

Trump is being handed a very very different situation than Reagan. Public and private debt levels are going to lead to a whole lot of trouble. I have bought gold and silver at much lower levels and I have bought them at higher levels. I will keep averageing in.

King Tut's picture
King Tut (not verified) jcdenton Dec 16, 2016 1:25 AM

Ronny started the destruction  of the middle class- charts prove it- Trump will finish them off through no fault of his own- he can't do jack shit about your local real estate taxes wiping Joe Six-Pack the fuck out in order to pay Officer Friendly $80K a year followed by his golden pension. Math is a real bitch 

DEMIZEN's picture

how about running hoosier town efficiently? Its a rhetorical question btw.  Property taxes wont kill if 60s sawdust shantyville lots go back to 30-40K. But yeah math is a real bitch and nothing trump can do about it.

it is time to get real.

jcdenton's picture

Dear OP ..

YOU do NOT know WTF you are talking about!

This is too easy for me ..

For everyone's benefit, I will simply use the template ..

I used on both Willie et al and Sprott et al on YOU ..

To make exact very same point ..


Sprott, I guess you didn't get the memo ..

Make our day!

Go ahead FED ..

Do your best ..

Do your level and FERAL best!

Crash the ecomony ..

I dare ya ..

I double dare ya!

The FERAL DISTURBED knows full well ..

How much cash resides in the US Treasury Cash Room ..

Enough to payoff the debt and trade deficits ..


Leaving no less than a $40,000,000,000,000 SURPLUS!

Let me repeat that ..


To fund infrastructure rehabilitation ..

Create new jobs ..

Literally, REBOOT the economy ..

It seems people like Dr. Jim Willie et al and YOU ..

Just didn't get that memo ..

WHY is that?

More important just to make a headline for yourself?

Even if that means sacrificing the truth to achieve it?

I can provide the best entertainment available ..

On ANY screen!

Plus, a good dose of the TRUTH with it ..

Name me anyone else who has attempted the same ..

To date ..


Willie, the national debt ..

With high probability .. (your supposed to be good at that; probabilities?)


We can determine that with a full audit ..

Just WHO determines we have a national debt?

The Feral Disturbed? (aka the federal reserve) ..

Are they willing to produce a full and complete audit ..

To convince us all?

If I, or you, and anyone for the matter ..

Had the remote capability ..

To pay off the debt in full ..

Don't you think it prudent ..

To first demand an audit ...

Before you put down your hard earned and lifelong efforts ..

And resources?

Or do we just trust via blind faith ..

From an institution that has little historical credibility ..

That we take your word for it?

I think we can all agree ..

That part of good finance ..

Is undivided wisdom?


I don't have a Ph.D in statistics ..

I don't even have a degree in economics ..

I'm not a PM dealer ..

I'm not a financial forecaster for pay ..

But apparently, I know MORE than any of you FUCKING idiots ..

(I'll graciously alter that to "educated MORONS.)

Think you do!


I think SOMEONE, owes me a paycheck ..

I do the WORK the rest of you ..

FAIL and REFUSE to do ..

For the rest of society ..

And ..

I will give you a BONUS ..

Just to prove ..


Something, MOST forgot how to do anymore ..

(see Klaatu) ..


Strange (closer to "spooky") I feel like the prophet Amos or Jeremiah to the Hebrews (not the Jews) ..

There is the MSM, the so-called "alt [left][right]" media, and the FREE Press ..

Explain to me and others here ..

WHAT is the FREE Press ..

More tantamount ..

WHERE is it!?!

If there is genuine GOOD NEWS ..

Then ................ SHARE IT!

Enough of this fear porn ..

Miss Informed's picture

Huh? I was just looking for constant bullish affirmations and hand holding but all I got here was condescension, sarcasm and an imagined future for New Jersey. If the 70s were really back I would be able to buy a leisure suit at Target, and a new Volkswagen Beetle for $2000 but so far nope.

wareco's picture

And I should give a shit about what this guy says because........?

Maestro Maestro's picture

I wouldn't mind seeing the stupid, arrogant, insidious, and misleading author of this article - and all other so-called traders- get hurt in a debilitating manner.

Insidious because the author implies and assumes the current American world order will last forever whereas Americans ARE the problem.

skipweston's picture

 The historical economic fundamentals no longer apply:


The US Economy reflects the manipulation of economic data to serve certain government and media agendas.

 If the perceived data is flawed and the economics laws are broken then the economic fundamentals are

 disconnected from the economic reality. The Fed's 4.5 Trillion Quantitative Easing Program was a band aid 

to save our 60 Trillion Credit System . The QE has also created a currency war between the Central Banks.

  The Central Banks are increasing their Gold Reserves preparing for the largest Credit Collapse in History.

  A new Gold Backed Reserve Currency will be created.  The 45 years of Gold & Silver price suppression will end and

the Gold Bugs will be rewarded for their patience.

"Gold is Money everything else is Credit" JP Morgan

Uwantsun's picture

Gold is keyed directly to US Dollar valuations. All else is intrigue, lies, and sales pitches.

ToSoft4Truth's picture

I think the writer is correct regarding the suburbs.


The cities will be safe under constant surveillance.  Driver-less and electric cars will work better in high density cities.


King Tut's picture
King Tut (not verified) ToSoft4Truth Dec 16, 2016 1:19 AM

You forgot the /sarc

Peak Finance's picture

This bit of history:

 It took 10 years to stop deflation. (well it was stagflation actually) 

Actually, it took 10 seconds to stop inflation. It took ten years to find someone with the balls to implement the correct policy to fix it. 

BobEore's picture

Man has a point -whether you're too stuck in a shopworn and antiquated mindset to grasp it, or not. And his cheap baiting obviously worked to pull your chain~

We've had quite enough articles that drone on about Shanghai, CRIMX, London and other variations on the constant theme of "this can't go on much longer" over the past five or years - nothing wrong with getting some new and/or different ideas to ponder - especially since the stale ones have failed to give any form of actionable or accurate intelligence about what to do in an era of marketless markets.

Whether this guy is right or wrong in his predictions about 'this is the 70's all over again,' at least it's fresher meat to chew on. The scurvied hordes of stackers whose teeth and hair have now fallen out due to the relentless stress of trying to reconcile facile, over-optimtistic narratives with the actual way that things have worked out for gold & silver in that 5 year interval are now finally getting ready to crawl towards the exits in despair.

Which is - and always was - for those who knew how to read the tea leaves, exactly what the necessary phase is for gold to finally shake off the ticks,tuff guys, and loud mouths who barked incessantly at those of use who refused to join their suicide pact  of slavish cultism to failed gold gurus all the while.

We're almost there now! The Grand Carnival of Souls which was Goldburg has devoured  most of it's inmates. C'mon out the rest of you shirkers! No escaping the fate of the damned - who never realised that light at the end of the tunnel was an oncoming train.

p.s. - 5=10% allocation of shiny? Laughable. Soul survivors went ALL IN after the TRUMP DECEPTION executed gold last month. It's that time - at last!

Crisismode's picture



The "5-10%" crowd of mealy-mouth wusses always entertained my ass.

Piss off you pansy-ass token-fuckers.

All in or lick your lily-white scrotum.

"Five to Ten percent of YOUR PORTFOLIO should be in precious metals

Yeah, tell that to your white princess wives

"Five to Ten percent of my dick should be up your vagina"



llessur_one's picture

Hard working Gwots, if annoying people with loud machines while performing unskiled labor and realy bad driving while pulling lawn mowers in a trailer behind a dump truck is hard work then I and the people i work with must be supermen.

pliny the longer's picture

Dear author:  i'm one of you, i really am.  i likey me the fizz.  i'm old school.  back in the day, i was what was referred to as a 'value' investor. i know, right!!  did you just spit your drink out on your keyboard?  because i can see there is no such thing as 'value' investor anymore.  but i  digress. 

which would u rather be, a goldbug trying not to wonder when the world sees like you do, or someone who makes enough to pay their house off and their kids education?  or is it 'education'.  you get what i mean.  gold holders win in the end.  but the end is a lot further away than you want to believe.  

JerseyJoe's picture

Gee how inwardly focused... No mention that 1.6B Muslins can start buying gold at the end of the month.

No mention to the arbitage between the SGE and London/Crimex paper gold scams... where spreads are running at mid $30 per ounce.  

Just some arrogant screed about gold bugs to get attention.  Jerk off.  

East Indian's picture

I checked the shariah gold standard - it is a set of guidelines for banks offering "gold products" to Islamic investors.

In other words, paper gold for muslims. 

The only "gold product" I will buy is jewellery. 


1.6 B muslims already buy gold, for the past 1400 years and more.

Lore's picture

You nailed it.  Reminds me of a couple of little girls next door, twins, who developed their own language that nobody else could understand.  Created big problems for them later in life. 

Pinto Currency's picture

In the 1970s physical gold was traded.
Now paper gold is traded in the West to set the price.
There is a premium of $48/oz at the Shanghai Gold Exchange vs the Western paper markets.

Now we have a fictional gold market:

USisCorrupt's picture

The charts on Gold mean NOTHING when everything is manipulated. I will stick with my insurance, gold, silver, bitcoin and bullets.